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Posted by Anne on April 17, 2007, 10:48 am
What is the difference for a fund (t rowe price, fidelity, dreyfus, vanguard)
which
lists Class A (plus some other alphabetic designations) ?
does the Class A somehow designate a better composition for the fund?
is it of significant benefit to be able to purchase a Class A without sales
fees,
other than the cost of the fees themselves (which is obviously a benefit)
because this
Class A does better somehow than the same fund Class T or similar ?
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Posted by joeNOSPAM@bea.com on April 17, 2007, 1:50 pm
> What is the difference for a fund (t rowe price, fidelity, dreyfus, vanguard)
which
> lists Class A (plus some other alphabetic designations) ?
>
> does the Class A somehow designate a better composition for the fund?
>
> is it of significant benefit to be able to purchase a Class A without sales
fees,
> other than the cost of the fees themselves (which is obviously a benefit)
because this
> Class A does better somehow than the same fund Class T or similar ?
Hi. Class A typically refers to a *LOADED FUND* that will take X% of
the money
you send them and kick it right back to whoever sold you the fund.
This is one
of the ways advisers get paid. However, if you do just a little
research, you can
always find a NO-LOAD fund that will meet the same purpose and
performance,
and that will save you lots of money.
Whether a fund is loaded or not, has zero bearing on how well it
will do
with your money (whatever's left after the fees). Some funds are back-
end
loaded so all your money goes in, but X% is cut away from you when you
take it out...
If you can buy a fund that is typically loaded, without paying the
load,
then it is on equal footing for comparison with other similarly
oriented
no-load funds. Then you can compare by performance and expenses.
Some loaded-funds have shares with no front or back load, but instead
take an extra bit out every year beyond what it actually takes to run
the
fund, which goes to the seller. It is best to avoid these loads if you
can
do your own fund choosing.
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Posted by kastnna on April 17, 2007, 2:33 pm
>From the NASD:
"Class A shares typically charge a front-end sales charge. When you
buy Class A shares with a front-end sales charge, a portion of the
dollars you pay is not invested. Class A shares may impose an asset-
based sales charge, but it generally is lower than the asset-based
sales charge imposed by the other classes. A mutual fund may offer you
discounts, called breakpoints, on the front-end sales charge if you:
make a large purchase;
already hold other mutual funds offered by the same fund family; or
commit to regularly purchasing the mutual fund's shares.
Class B shares typically do not charge a front-end sales charge, but
they do impose asset-based sales charges that may be higher than those
that you would incur if you purchased Class A shares. Class B shares
also normally impose a contingent deferred sales charge (CDSC), which
you pay when you sell your shares. For this reason, these should not
be referred to as "no-load" shares. The CDSC normally declines and
eventually is eliminated the longer you hold your shares. Once the
CDSC is eliminated, Class B shares often then "convert" into Class A
shares. When they convert, they will begin to charge the same asset-
based sales charge as the Class A shares.
Class B shares do not impose a sales charge at the time of purchase.
So unlike Class A purchases, all of your dollars would be immediately
invested. But your expenses, as measured by the expense ratio, may be
higher. You also may pay a sales charge when you sell your Class B
shares.
If you intend to purchase a large amount of Class B shares, you may
want to discuss with your financial adviser whether Class A shares
would be preferable. The expense ratio charged on Class A shares is
generally lower than for the Class B shares, and the mutual fund may
offer large-purchase breakpoint discounts from the front-end sales
charge for Class A shares.
Class C shares usually do not impose a front-end sales charge on the
purchase, so the full dollar amount that you pay is immediately
invested. Often Class C shares impose a small charge if you sell your
shares within a short time of purchase, usually one year. Class C
shares typically impose higher asset-based sales charges than Class A
shares, and since their shares generally do not convert into Class A
shares, their asset-based sales charge will not be reduced over time.
Class C shares are often used for asset-allocation purposes.
Class C shares do not impose a sales charge at the time of purchase,
but they may impose a CDSC or other redemption fees. Additionally, in
most cases your expense ratio would be higher than Class A shares, and
even than Class B shares if you hold for a long time!"
---
ALL MUTUAL FUNDS HAVE FEES AND EXPENSES. How do you think they pay the
light bill? Its not as simple as "load" and "no-load." Just because
you can't readily see them, doesn't mean they are not there.
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Posted by Brandon Hansen - www.BrandonHa on April 20, 2007, 11:03 am
The important thing to remember is that if you are in a fund, you will
pay for it. There is a difference between a "No Load" and a "No Cost"
fund. Every fund costs you money. You either pay it now or later. So
it depends on what your preference is.
My personal preference is to pay it up front and be done with it.The
fees are based on a % of the amount in the fund and when you put the
money in, that is when you typicaly have the least amount of money in
the fund (ideally). If you don't pay the fee going in then you will
either pay a percentage of it on an annual basis or when you come out
of the fund.
They get you coming or going.
Brandon Hansen
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Posted by Justin on April 20, 2007, 12:21 pm
Brandon Hansen - www.BrandonHansen.com wrote on [Fri, 20 Apr 2007 10:03:48
-0500]:
> The important thing to remember is that if you are in a fund, you will
> pay for it. There is a difference between a "No Load" and a "No Cost"
> fund. Every fund costs you money. You either pay it now or later. So
> it depends on what your preference is.
No, if you pay it up front you ALSO pay it every year as an expense
ratio.
> My personal preference is to pay it up front and be done with it.The
> fees are based on a % of the amount in the fund and when you put the
> money in, that is when you typicaly have the least amount of money in
> the fund (ideally). If you don't pay the fee going in then you will
> either pay a percentage of it on an annual basis or when you come out
> of the fund.
I suggest you research this, you are completely wrong.
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